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SIC 5912 Miscellaneous Retail - Drug stores and proprietary stores
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Pharmacy Business Plan
The Discount Pharmacy
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Financial Plan
The following sections will outline important financial information.
8.1 Break-even Analysis
The Break-even Analysis calculates what will be needed in monthly revenue to reach the break-even point.
| Break-even Analysis | |
| Monthly Revenue Break-even | $48,808 |
| Assumptions: | |
| Average Percent Variable Cost | 40% |
| Estimated Monthly Fixed Cost | $29,285 |
8.2 Projected Profit and Loss
The following table and charts present projected profit and loss.
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $441,822 | $967,265 | $1,071,877 |
| Direct Cost of Sales | $176,729 | $386,906 | $428,751 |
| Other Production Expenses | $0 | $0 | $0 |
| Total Cost of Sales | $176,729 | $386,906 | $428,751 |
| Gross Margin | $265,093 | $580,359 | $643,126 |
| Gross Margin % | 60.00% | 60.00% | 60.00% |
| Expenses | |||
| Payroll | $268,620 | $322,960 | $330,960 |
| Sales and Marketing and Other Expenses | $8,400 | $8,400 | $8,400 |
| Depreciation | $1,704 | $1,704 | $1,704 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $4,800 | $4,800 | $4,800 |
| Insurance | $3,600 | $3,600 | $3,600 |
| Rent | $24,000 | $24,000 | $24,000 |
| Payroll Taxes | $40,293 | $48,444 | $49,644 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $351,417 | $413,908 | $423,108 |
| Profit Before Interest and Taxes | ($86,324) | $166,451 | $220,018 |
| EBITDA | ($84,620) | $168,155 | $221,722 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $0 | $49,935 | $66,005 |
| Net Profit | ($86,324) | $116,516 | $154,013 |
| Net Profit/Sales | -19.54% | 12.05% | 14.37% |
8.3 Projected Cash Flow
The following chart and table display the projected cash flow.
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $441,822 | $967,265 | $1,071,877 |
| Subtotal Cash from Operations | $441,822 | $967,265 | $1,071,877 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| Subtotal Cash Received | $441,822 | $967,265 | $1,071,877 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $268,620 | $322,960 | $330,960 |
| Bill Payments | $244,177 | $546,807 | $589,427 |
| Subtotal Spent on Operations | $512,797 | $869,767 | $920,387 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $512,797 | $869,767 | $920,387 |
| Net Cash Flow | ($70,975) | $97,498 | $151,490 |
| Cash Balance | $69,525 | $167,024 | $318,513 |
8.4 Important Assumptions
The following table details important financial assumptions.
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 10.00% | 10.00% | 10.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
| Tax Rate | 30.00% | 30.00% | 30.00% |
| Other | 0 | 0 | 0 |
8.5 Projected Balance Sheet
The following table shows the projected balance sheet.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $69,525 | $167,024 | $318,513 |
| Inventory | $28,838 | $63,135 | $69,963 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $98,364 | $230,159 | $388,477 |
| Long-term Assets | |||
| Long-term Assets | $8,500 | $8,500 | $8,500 |
| Accumulated Depreciation | $1,704 | $3,408 | $5,112 |
| Total Long-term Assets | $6,796 | $5,092 | $3,388 |
| Total Assets | $105,160 | $235,251 | $391,865 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $32,484 | $46,059 | $48,660 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $32,484 | $46,059 | $48,660 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $32,484 | $46,059 | $48,660 |
| Paid-in Capital | $183,100 | $183,100 | $183,100 |
| Retained Earnings | ($24,100) | ($110,424) | $6,092 |
| Earnings | ($86,324) | $116,516 | $154,013 |
| Total Capital | $72,676 | $189,192 | $343,205 |
| Total Liabilities and Capital | $105,160 | $235,251 | $391,865 |
| Net Worth | $72,676 | $189,192 | $343,205 |
8.6 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the NAICS code 446110, Pharmacies and Drug Stores, are shown for comparison.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 118.93% | 10.82% | 11.07% |
| Percent of Total Assets | ||||
| Inventory | 27.42% | 26.84% | 17.85% | 36.78% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 26.80% |
| Total Current Assets | 93.54% | 97.84% | 99.14% | 90.26% |
| Long-term Assets | 6.46% | 2.16% | 0.86% | 9.74% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 30.89% | 19.58% | 12.42% | 45.28% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 14.93% |
| Total Liabilities | 30.89% | 19.58% | 12.42% | 60.21% |
| Net Worth | 69.11% | 80.42% | 87.58% | 39.79% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 60.00% | 60.00% | 60.00% | 14.44% |
| Selling, General & Administrative Expenses | 93.39% | 44.47% | 42.20% | 2.35% |
| Advertising Expenses | 1.28% | 0.50% | 0.45% | 0.38% |
| Profit Before Interest and Taxes | -19.54% | 17.21% | 20.53% | 1.99% |
| Main Ratios | ||||
| Current | 3.03 | 5.00 | 7.98 | 1.74 |
| Quick | 2.14 | 3.63 | 6.55 | 0.86 |
| Total Debt to Total Assets | 30.89% | 19.58% | 12.42% | 63.63% |
| Pre-tax Return on Net Worth | -118.78% | 87.98% | 64.11% | 5.59% |
| Pre-tax Return on Assets | -82.09% | 70.75% | 56.15% | 15.37% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | -19.54% | 12.05% | 14.37% | n.a |
| Return on Equity | -118.78% | 61.59% | 44.87% | n.a |
| Activity Ratios | ||||
| Inventory Turnover | 10.34 | 8.41 | 6.44 | n.a |
| Accounts Payable Turnover | 8.52 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 26 | 29 | n.a |
| Total Asset Turnover | 4.20 | 4.11 | 2.74 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.45 | 0.24 | 0.14 | n.a |
| Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $65,880 | $184,100 | $339,817 | n.a |
| Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.24 | 0.24 | 0.37 | n.a |
| Current Debt/Total Assets | 31% | 20% | 12% | n.a |
| Acid Test | 2.14 | 3.63 | 6.55 | n.a |
| Sales/Net Worth | 6.08 | 5.11 | 3.12 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
